The increasing generation of electricity from rooftop solar panels has had an impact on the utility industry, and it’s one they’re not particularly happy about. A recent paper by the Edison Electric Institute, entitled “Disruptive Challenges,” sounds dire warnings about what this could mean for their future. Solar energy burns a hole in the prime time peak power sold during the day, when the air conditioning load is highest. That is when utilities charge the highest rates and when they use the most of their capacity. It’s also when they get best value from their generation assets, when everything is running at full steam.
Not only do they lose sales, but they are also required to buy up any excess power from those self-generators, providing a back-up service for them in the process, swooping in with needed electrons any time the sun goes behind a cloud. That provision is called net metering, which is now mandated in more than 40 states.
There are a lot of people who aren’t too crazy about the power companies, but we can’t afford to see them go away because of the infrastructure that they provide and support. It’s analogous to an issue in the transportation sector where, if you start getting more people into electric vehicles, what happens to the roads? A lot of the road infrastructure, repairs and upgrades, are paid for by gasoline taxes. As more people get into electric cars, how do these things get paid for? Watch for that issue to emerge in the months and years to come.
California has set a great example for a solution for the utility problem, with a compromise that balances the needs of consumers who want to go solar with the needs of the utilities to maintain the infrastructure that delivers electricity. PG&E can bill its solar customers an additional $10 a month to help maintain the grid and backup power, and can apply for a rate hike if more of its customers switch to solar. The solar power companies get an increase in the amount of power that can be sold back to the utility.
The balance is really critical. If the utilities raise their rates too high, that’s going to incent even more people to get off of it and go on to solar—which would be counterproductive. On the other hand, if they add exorbitant fees to the solar customers, that could quash the rapid development of solar. Neither of these are acceptable outcomes. This compromise seems reasonable. Ten dollars a month doesn’t sound like much, but when you add it up from many customers, it’s enough to maintain the grid.